A firm's foreign direct investment. decisions are, in the case of horizontal FDI, strongly influenced by ________ and, in the case of vertical FDI, strongly influenced by ________.

Question

Quizplus · Accepted Answer

Horizontal FDI is primarily driven by the desire to bypass trade costs, such as tariffs and transportation costs, by producing in the target market. Vertical FDI, on the other hand, is motivated by the firm's desire to lower production costs by taking advantage of cheaper inputs (like labor or materials) in foreign locations.

A Firm's Foreign Direct Investment